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The Renewable Energy Development and Related Promotion and Pricing
Mechanism in Japan
September 26, 2013
APEC Workshop on Renewable Energy Promotion and Pricing Mechanism, Taipei, Chinese Taipei
Takao IkedaThe Institute of Energy
Economics, Japan (IEEJ)
2
Generation Mix
3
Generation Mix Trend in Japan
(Source) METI
§ LNG mainly compensates for the decline of nuclear after 2011
Note: “Etc.” of “Renewable energy, etc.” includes the recovery of energy derived from waste, refuse derived fuel (RDF) products, heat supply utilizing waste heat, industrial steam recovery, and industrial electricity recovery.
Source: Prepared based on the Agency for Natural Resources and Energy’s “Outline of Electric Power Development in FY 2010”
Among the total electricity generated in fiscal 2010, renewable energy, etc. accounted for approximately 10%; approximately 9% of which is hydraulic power generation.
Other renewable energy is still cost prohibitive.
Approx. 24%
Approx. 31%
Approx. 27%
Approx. 8%
Approx. 9% Approx. 1%
PetroleumCoal
Natural gas
Nuclear power
Hydropower
Renewable energy
excluding hydropower
4
Natural gas
Coal
Approx. 25%
Petroleum
Approx. 14.4%
Nuclear power
Approx10.7 %
Hydropower
Approx. 9%
Approx. 1.4%Renewable en-ergy excluding hydropower
Approx39.5 %
Composition of annual electricity generated in Japan
FY 2010 FY 2011
4
Current Generation Mix in Japan
5
Promotion and Pricing Mechanism of New and Renewable Energy
Major laws and strategies for Renewable Energy in Japan #1
1. Sunshine Project (1974) Long-term national project for new energy technology research and development in Japan launched in July 1974.
In 1993, Sunshine project was renewed as the New Sunshine Project consolidated with Moonlight Project ( Energy Efficiency) and other environmental project. The project has finished in 2000.
2. Law Concerning Promotion of the Development and Introduction of Alternative Energy (1980 ) Known as “Oil Alternative Energy Law”. Oil Alternative Energy were developed and introduced for (1)Combustion, (2)heat, (3)energy, and (4)electricity which are generated from other than oil products. In 2009, oil alternative law was renewed as “NonFossil Energy Law”. In this law, energy suppliers (Electricity/Gas/Oil companies) have to use non-fossil energies while using fossil oil efficiently.
3. Law Concerning Special Measures to Promote the Use of New Energy (1997) Known as “New Energy Law”. New Energy is energy which are not price-competitive among Oil Alternative Energy. Hydropower and Geo-thermal power are not included because of their price-competitiveness.(http://www.japaneselawtranslation.go.jp/law/detail/?ft=1&re=02&dn=1&co=01&ky=%E6%96%B0%E3%82%A8%E3%83%8D%E3%83%AB%E3%82%AE%E3%83%BC&page=3) 6
7
Revision of “New Energy”
(Source) Agency for Natural Resources and Energy, Ministry of Economy, Trade and Industry (METI), Japan (modified by IEEJ)
OilAlternative Energy
Large Hydropower
Ocean Energy
Recycling EnergyNatural Energy
Photovoltaic Power
Wind Power
Solar Thermal
Waste-based Fuels (RDF)
(Energy Crops)
Unutilized Energy(Snow Ice)
Biomass
Biomass Power
Biofuels
Renewable Energy
Geothermal(binary)
Natural Gas Nuclear PowerCoal
New Energy
Biomass Thermal
(Black Liquor)(Scrap Wood)
Waste Power
Unutilized Energy(Temperature
Deference Energy)
Waste Thermal
Small Hydropower Geothermal
Innovative High-level Energy Utilization Technology
Development of Renewable Energy
Rapid Advancement of Energy Efficiency
Diversification of Energy Source
PV ( High Efficiency, New Materials ) , Battery for PV and Wind in parallel including capacitor, Ethanol Production Technology from lignocellulosic biomass, BTL ( Biomass to Liquid ) Production Technology, Gasification Power Generation from Biogas
Stationary Fuel Cell, Hybrid Auto, Natural Gas Cogeneration, Heat Pump, Oil Residue Gasification Technology (IGCC, IGFC, etc), Clean Coal Technology
Fuel Cell Vehicle, Electric Vehicle, Plug-in Hybrid Vehicle, CNG Vehicle, Diesel-substitute LP gas Vehicle, Hydrogen Vehicle, High Concentration Bio Fuel Vehicle, GTL Production Technology, DME Production Technology, Non-traditional Fossil Fuel Usage Technology (Methane Hydrate, Oil Sand, etc)
Major laws and strategies for Renewable Energy in Japan #2
4. Special Measures Law Concerning the Use of New Energy by Electric Utilities (2002) Known as RPS (Renewable Portfolio Standard) Law. In this law, the amount usage of renewable energy goals were established with 5 kinds of electricity (wind, solar, small hydropower, biomass power generation , binary geothermal).( http://www.rps.go.jp/RPS/new-contents/top/toplink-english.html)
5. Biomass Nippon Strategy (2002/2006) Comprehensive strategy of utilization of biomass set by Ministry of Agriculture, Forestry and Fisheries in cooperation with Ministry of Economy, Trade and Industry, the Ministry of the Environment, and Ministry of Land, Infrastructure, Transport and Tourism etc.
6. New National Energy Strategy (2006) National energy strategy for 2030. Regarding renewable Energy, (1) promoting innovation in new energy technologies (achievement of PV power cost reduction comparable to thermal power generation etc.), (2) introducing 20% alternative energy in transportation sector etc.
7. Special Measures Law Concerning the Purchase of Renewable Energy Electricity by Electric Utilities (2011)Known as FIT (Feed in Tariff) Law, which will start from July, 2012. In this law, the purchasing price and its duration will be determined separately.
8
Outline
RPS (Renewable Portfolio Standard) wind, solar, small hydropower, biomass power generation , binary geothermal 8-year target set by every 4 years
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2003
Buyback surplus PV electricity from residence Developed from Utilities’ voluntary Net metering system
2009 Nov
Passage of FIT Law2011 Aug
Commencement of FIT Start from July 1
2012 Jul
Public Comment From May 16 to June 1
2012 May
Proposal from the Advisory Committee Proposal from Advisory committee for the purchasing rate and the duration
2012 Apr
Revision of PV tariff Based on the PV system price decline
FY 2013
2003
2004
2005
2006
2007
2008
2009
2010 Wind
Wind
Wind
Wind
Wind
Wind
Wind
Wind
Hydro
Hydro
Hydro
Hydro
Hydro
Hydro
Hydro
Hydro
Biomass
Biomass
Biomass
Biomass
Biomass
Biomass
Biomass
PV
PV
PV
PV
Biomass
PV
PV
PV
PV
PV under Buyback
PV under Buyback
Commencement of RPS
Buyback System for surplus PV electricity from residence
(TWh)
0.0 2.0 4.0 6.0 8.0 10.0 12.0
Renewable Energy Purchased by Utilities under RPS
10
Source: METI
Buyback System started from Nov 2009(1)
○Of the electricity generated by photovoltaic generation systems, surplus electricity will be purchased.○ The buyback period is within the 10 years from the start of the program. The buyback price is fixed.
( The buyback price may differ depending on the fiscal year in which a panel is installed. In the initial stages, it is \48/kWh for residential ※use [less than 10kW].)
○ Expenses will be born by all electricity users.
Major points of the buyback system
Purchase revenue(\48/kWh for residential use)
as of Nov. 2009
Surplus electricity
Users of photovoltaic generation systems
Solar surcharge(Born by all electricity
users)
Electricity
Electric P
ower
Com
paniesE
lectric Pow
er C
ompanies
Electricity U
sersE
lectricity Users
Purchase revenue(\24/kWh for purposes other
than residential use)
Surplus electricity
※In the initial stages after installation, \48/kWh for residential use (less than 10kW) and \24/kWh for other uses. In the case where a private electric generator is also installed, \39/kWh and \20/kWh, respectively.
11
12
November 2009- March 2011
April 2011-March 2012 (FY2011)Continued until April 2013 (FY2012)
Residential UseUnder 10kW
48 JPY/kWh(39 JPY/kWh)
42 JPY/kWh(34 JPY/kWh)
Non Residential Use and Residential Use Over 10kW
24 JPY/kWh(20 JPY/kWh)
40 JPY/kWh(32 JPY/kWh)
*Rate increased because of finishing subsidy
Rate inside the brackets are for the houses/ facilities using private generation system (photovoltaic generation plus fuel cells, etc.)
Buybacks rate will be decide each year and the rate continues for 10 years after the start of the program.
Buyback System started from Nov 2009(2)
Source: METI
FIT Basic Scheme (Started From July 2012)
Utilities
Power from PV at houses
Power producers utilizing renewable
energy
PV
Middle & Small Hydro
Wind
Biomass
Geothermal
Electricity from Renewable Source
Purchase Electricity
Decide Surcharge rate for FIT every
fiscal year
Collecting Surcharge rate for FIT
With ordinary electricity rate
Advisory committee for purchasing price etc
Decide the tariff rate every fiscal year with respect for the opinion
from advisory committee for purchasing price
Approving power generation facilities
CustomersOrganization for adjusting the surcharge by different region
Supply Electricity
Fund for Purchasing Electricity from
Renewable Energy
Payment of collecting amount
of surcharge
Advice of Rate and Duration
Minister Economy, Trade and Industry
14
Source: METI
RPS(PV: Buyback) Feed in Tariff
PV Under about 500kW No Limitation by Capacity
Wind - -
Hydro Under 1MW Under 30MW
Geothermal Only Binary Cycle power plant No Limitation
(Including Flash Steam Plant)
Biomass No category Differentiate the purchase rate by category
Major Revision from RPS to FIT
15
Electricity Cost Estimation in Japan
Source: National Policy Unit, Cabinet Secretariathttp://www.npu.go.jp/policy/policy09/archive02_shisan_sheet.html
201020202030(Japanese Yen/kWh)
16
Feed in Tariff started from July 2012
Source: METI
FY 2013; PV 10kW >=: \37.8(36.0+Tax)/kWh, 10kW< \38.0/kWh (Incl. Tax)
17
Deployment in FY2012 and FY2013(April and May)
Source: METI
Major part of deployment under FIT is PV due to the development Terms
(MW)
Cummulative Deployment Volume as of March 2011
(Approxmate)
Start operation from April 2012 to March 2013
Start operation
from April to May 2013
Development Term
PV (Residential) 4,400 1,269(Apr-Jun: 300) 279 2-3months
PV (Non Residential) 900 706(Apr-Jun: 2) 961 1 Year
Wind 2,600 63(Apr-Jun: 0) 2 4-5 Yrs
Middle and Small Hydro(More than 1MW) 9,400 1
(Apr-Jun: 1) 0 2-3Yrs
Middle and Small Hydro(Less than 1MW) 200 3
(Apr-Jun: 1) 0 2-3Yrs
Biomass 2,300 36(Apr-Jun: 6) 38 3-4Yrs
Geothermal 500 1(Apr-Jun: 0) 0 9-13Yrs
18
PV System cost revison (residential use)
Source: METI
FIT for PV residential sect which is started from July 2012 was based on the PV System cost of JPY(10 thousand) 46.6 / kW in 1st Q 2012.
Revised FIT for residential PV for FY 2013 should be based on the latest (4th Qtr) cost which is JPY(10 thousand) 42.7 / kW.
About JPY(10 thousand) 4 / kW has dropped
(10thousand JPY/kW)
Oct-Dec,2011
Jan-Mar,2012
Apr-Jun,2012
Oct-Dec,2012
Jul-Sep,2012
Jan-Mar,2013
Apr-Jun,2013
Already Build
Total Ave.
Newly Build
System cost for FY2012 tariff
Latest System cost for FY2013 tariff
Fiscal YearSubsidy
(10Thousand JPY/kW)Condition
(10Thousand JPY/kW)Buy BackTariff
(JPY/kWh)
2010 70 650 482011 48 600 422012 35 475 42
2013 20 410 38
National Government Subsidy for Residential PV system
19
Development in the Future
20(Source) Agency for Natural Resources and Energy, Ministry of Economy, Trade and Industry (METI), Japan
Mori Geothermal Plant(Hokkaido Electric Power Co., Inc. DonanGeothermal Energy Co., Ltd.)
Onuma Geothermal Plant(Mitsubishi Materials Corporation)
Sumikawa Geothermal Plant(Tohoku Electric Power Co., Inc.and Mitsubishi Materials Corporation)
Uenotai Geothermal Plant(Tohoku Electric Power Co., Inc.and Akita Geothermal Energy Co., Ltd.)
Hacchobaru Geothermal Plant,Unit 1 and Unit 2(Kyushu Electric Power Co., Inc.)
Otake Geothermal Plant(Kyushu Electric Power Co., Inc.)
Takigami Geothermal Plant (Kyushu Electric Power Co., Inc.and Idemitsu Oita Geothermal Co., Ltd.)
Kokonoe Geothermal Plant(Kokonoe Kanko Hotel)
Takenoyu Geothermal Plant(Hirose Trading Co., Ltd.)
Yamagawa Geothermal Plant (Kyushu Electric Power Co., Inc. andJapex Geothermal Kyushu Co., Ltd.)
Suginoi Geothermal Plant(Suginoi Hotel)
Ogiri Geothermal Plant (Kyushu Electric Power Co.,Inc. and Nittetsu KagoshimaGeothermal Co., Ltd.)
Kirishima Kokusai Hotel Geothermal Plant (Daiwabo Kanko Co., Ltd.)
Matsukawa Geothermal Plant (Japan Metals & Chemicals Co., Ltd.)
Kakkonda Geothermal Plant, Unit 1(Tohoku Electric Power Co., Inc. and Japan Metals & Chemicals Co., Ltd.)
Kakkonda Geothermal Plant, Unit 2(Tohoku Electric Power Co., Inc. and Tohoku Geothermal Energy Co., Ltd.)
Onikobe Geothermal Plant(Electric Power Development Co., Ltd.)
Yanaizu-Nishiyama Geothermal Plant(Tohoku Electric Power Co., Inc. and Okuaizu Geothermal Co., Ltd.)
Hachijojima Geothermal Plant (Tokyo Electric Power Co., Inc.)
Geothermal Power Plants (Japan)
Governmental support measures FY 2012 budget
[Targets] Cost of test drilling, etc. including geological surveys.
Budget: \9.05 billionSubsidy ratio: 50% to 75%
Subsidy
Exploration (drilling of exploration wells, etc.)
Construction stage Installation of power generation facilitiesGeological survey
Investment Loan guarantee
[Targets] Cost of drilling exploration wells to check whether a sufficient volume of steam can be stably extracted from heat sources.
Budget : \5 billionInvestment ratio: 50%
[Targets] Cost of drilling wells necessary for power generation
Budget: \1 billionLoan guarantee ratio: 80%
Electric utilities purchase electricity generated from renewable sources including geothermal at the procurement price and for the procurement period.
Feed-in tariff scheme
Risk
Choice of Energy Options:Issued on June 2012
The geothermal amount of introduction is made into 3% of the total electric power production (27,200
millions kwh) at the maximum in 2030. 2010 track record: ※ 0.2% (2,600 millions kwh)
21
Regulations on geothermal development
1. Natural Park Act Geological surveys and drillings for geothermal energy in national parks are restricted according to the protection zones.
2. Hot Spring Act Drilling in pursuit of hot springs (hot water, mineral water, steam and other gas from underground) requires a permission of the prefectural governor.
3. Forest Law Cutting down protected forests for constructing a base for drilling or a power generation plant requires delisting from protected status. Delisting requires a proven necessity for the public interest.
4. Act on Special Measures concerning Reform of National Forest Business Management Constructing a base for drilling or a power generation plant in a national forest requires loaning. A national forest can be used for public use or within 5ha in area, otherwise it cannot be used.
5. The Environmental Impact Assessment Law Constructing a power generation plant with output of 10,000kW or over requires EIA. When constructing a power generation plant with an output of 7,500kW-10,000kW, the necessity of EIA is judged by project.
6. Electric Utilities Industry Law Power facilities requires placing chief engineers in charge of supervision of safety matters of construction work, maintenance and operation of the power facilities.
22
23
Offshore Wind demonstration project
Offshore of Choshi, Chiba Pref.(2.4MW) /Offshore of Kitakyushu, Fukuoka Pref (2.0MW)
Wind ResourceWind Speed
Offshore of Fukushima Pref.
METI2MW class Floating offshore wind turbine and
2 set of 7 MW class floating wind turbineFloating substation from FY2013
METI (NEDO)2MW class wind turbine Wind observatory towerdemonstration projects
started from FY2012
Offshore of Goto, Nagasaki Pref.(2.4MW) MOE
100KW class floating wind turbine from FY2012
2MW class floating Wind from FY2013
24
Renewable Energy Deployment Potential in Japan -19%
Grid Framework in Japan
25
Tokyo
Tohoku
Hokkaido
KansaiChubu
Kyushu
Hokuriku
Direct current power
transmission
Frequency converter station
Shikoku
Direct current power transmission
Solar and Wind Power Deployment Potential in Japan
26
27
Large Battery Demonstration Projects
Lithium-ion Battery NAS BatteryRedox Flow Battery
Hokkaido Electric Company Tohoku Electric CompanyChubu Electric CompanyKansai Electric Company
Type of Battery Redox Flow battery Lithium- ion Battery NAS BatteryCapacity 40MW 20MW 6MW
Project ObjectiveSurplus Electricity from
Wind powerFrequency Fluctuation
Grid Stabilization from PV(Surplus Elec. & Frequency
Fluctuation)
Large Battery Demonstration Projects for Grid Stabilization
R&D Target : Cost reduction of batteries as same level as Pumped Hydro in 2020
Demonstration Project on Next-generation Energy and Social Systems in Japan (FY 2010-FY2014)
Demonstration using new technologies in science city
Demonstration in industrial city
Kitakyushu City
Large-scale demonstration in major city
Community-based demonstration in provincial
city
28
Yokohama City
Toyota City
Kyoto Keihanna District
Large-scale and cutting-edge pilot projects have been launched in 4 areas. The outcomes to be accumulated through the projects will be utilized to create smart communities and smart cities in Asia and other countries.
Information of Smart Community Projects
29
http://jscp.nepc.or.jp/en/http://jscp.nepc.or.jp/en/video.shtml
Thank you for your attention!
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